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Legal Update - 19 April 2017

LABOUR LAW IN MYANMAR

Introduction

This article explores various issues of labour matters in Myanmar. This is an important area of discussion because, in Myanmar, labour law is not codified, i.e. there is no labour code in Myanmar, which may create uncertainty at times. The purpose of this article is to examine certain areas, not all, in order to bring about some clarity when dealing with labour related issues in Myanmar.

Employment Contract

If an employer hires an employee, then an employment contract must be signed within 30 days from the offer being accepted (Section 5 (a) (1) of the Employment and Skill Development Law of 2013 (“ESDL”)). If the employment is related to the government, or a pre-hiring training period, it is not necessary to sign an employment contract (Section 5 (a) (1) of the ESDL).

Notification 1/2015 of the Ministry of Labour, Immigration and Population (“MLIP”) published on 31 August 2015 requires all employers and employees to sign a prescribed form of an employment contract (the standard employment contract) (Section 4 of Notification 1/2015). In theory, non-compliance with this rule may cause imprisonment for up to one year and/or a fine (Section 36 of the ESDL).

It should be noted that an employer must send a copy of the signed employment contract to a relevant township labour department, and shall obtain its approval (Section 5 (g) of the ESDL). Up to this date, the relevant by-laws have not been passed; therefore, a specific timeline for sending and approving an employment contract has not been set.

Payment of Wages and Minimum Wage

In Myanmar, employees’ wages can be paid either in Myanmar Kyat or any foreign currency recognised by the Central Bank of Myanmar (Section 3 (a) of the Payment of Wages Law of 2016 (“PWL”)). It is normal practice to pay employees in US dollars with regard to foreign-owned companies in Myanmar.

Permanent employees are paid monthly (Section 4 (c) of the PWL). If an employee is dismissed, his/her wages entitlement must be paid within two working days from the dismissal date (Section 4 (d) of the PWL). If an employee resigns by submitting a notice, wages must be paid at the end of a notice period (Section 4 (e) of the PWL). If an employee dies, the wage entitlement must be paid to the legal successor within two working days from the death (Section 4 (f) of the PWL). Payment of wages must be made on working days (Section 4 (g) of the PWL).

Notification 2/2015 approved the minimum wage for an eight-hour working day of Kyat 3,600 or Kyat 450 per hour. The minimum wage rate does not apply to small and family businesses with 15 or less employees (Section 9 of Notification 2/2015) and civil servants (Section 2 (a) of the Minimum Wage Law of 2016 (“MWL”)).

Working Hours and Overtime

A normal working day in Myanmar, regardless of the sector, is eight hours (Sections 62 of the Factories Act of 1951 (“FA”), 11 (a) of the Shops and Establishments Law of 2016 (“SEL”) and 33 of the Oilfields (Labour and Welfare) Act of 1951 (“OLWA”), 95 (b) of the Myanmar Mines Rules of 1996 (“MMR”)).

Maximum working hours per week vary depending on the sector, as shown below:

44 hours for factory workers. An adult male worker in a factory engaged in work which, for technical reasons, must be continuous throughout the day may work 48 hours a week (Section 59 of the FA);

48 hours for shop and establishment workers (Section 11 (a) of the SEL);

44 hours for oilfield workers. An adult worker engaged in work which, for technical reasons, must be continuous throughout the day may work 48 hours a week (Section 30 of the OLWA); and

40 hours for mine workers. 48 hours may be permitted, if a person is required to work the whole day continuously due to requirements of work (Section 95 (b) of the MMR).

In general, overtime payment is twice the normal rate (Sections 73 (1) of the FA, 10 of the Shops and Establishments Act of 1951 (“SEA”), 44 (1) of the OLWA, 93 (a) of the MMR).

All workers, regardless of sector, assigned to work on a public holiday must be paid at double time (Section 3 (2) of the Leave and Holidays Act of 1951 (“LHA”)).

Leave and Holidays

All employees in Myanmar are entitled to the following paid leave and holidays under the LHA):

Public holidays (Section 3 (1) of the LHA). Section 3 (1) of the LHA provides for 14 public holidays, including three days for the Myanmar New Year Water Festival. However, in practice, the Myanmar government announces around 25 public holidays annually, including about 5 days for the Myanmar New Year Water Festival. In Myanmar, if a public holiday falls on a Saturday or Sunday, an additional holiday is not provided (Section 3 (2) of the LHA);

“Earned” or annual leave of 10 consecutive days (Section 4 (1) of the LHA);

Casual leave of six days per year, provided that only three days of casual leave can be taken at any one time (Section 5 (1) of the LHA); and

Medical leave or leave on medical certificate can be granted for not more than 30 days per year (Section 6 (1) of the LHA).

Termination of an Employment Contract

In Myanmar, both an employee and an employer can terminate an employment contract. An employee can terminate an employment contract during a probationary period by giving a seven day notice (Section 2 (e) of the standard employment contract), and during a “normal” period of employment by giving one month notice (Section 14 (a) (1) of the standard employment contract). In this case, an employee is eligible to receive a payment for a notice period of seven days or one month respectively (Sections 2 (e) and 14 (a) (3) of the standard employment contract). If an employee terminates an employment contract without giving notice, the employer must pay the remaining salary (Sections of 2 (e) and 14 (a) (3) of thestandard employment contract). In this case, an employee is not eligible to receive a severance payment.

An employer can terminate an employment contract during either a probationary period or a “normal” period by giving one month notice (Sections 2 (d) and 14 (b) (2) of the standard employment contract). If an employer would like to terminate an employment contract without giving one month notice, the employer must pay compensation in the amount of the salary for one month (Sections 2 (d) and 14 (a) (3) of the standard employment contract). An employer must also pay a severance payment, as discussed below, if the employer terminates an employment contract during a “normal” period of employment; provided that an employee has not committed any misconduct (Section 14 (b) (2) of the standard employment contract).

An employer can terminate an employment contract, if an employee commits misconduct. In this case, neither a notice period, nor a severance payment is required (Section 14 (b) (1) of the standard employment contract).

Our understanding is that if an employee commits minor misconduct, e.g. being late to work, the employer can terminate an employment contract after giving three warnings: a personal warning, a written warning and a warning to be signed by an employee (Section 14 (b) (1) of the standard employment contract). However, if an employee commits major misconduct, e.g. a crime, an employer can terminate an employment contract immediately (Section 15 (f) of the standard employment contract).

Severance Payments

Notification 84/2015 of the MLIP prescribed severance payments calculated on the basis of an employee’s last salary (without overtime premium).

An employee is eligible to receive a severance payment, if he or she works for at least six months with a minimum payment of 50% of one month salary. A severance payment is higher for employees who have worked for one employer for a longer period of time. The highest severance payment is 1300% of one month salary, in the case of an employee performing work for 25 or more years for one employer.

Conclusion

As we discussed above, Myanmar laws and regulations on labour and employment are not consolidated: there is no labour code in Myanmar. Employment provisions vary from one industry to another industry and have different rules on working hours, overtime pay, safety etc. Some acts were enacted during a colonial administration, some during the early years of independence and some during a military government. Since peaceful transition of power from a military administration to a civil administration in 2011, the Myanmar government has been making efforts to update old labour and employment laws, and regulations.

Although this is a positive process in harmonising the old laws and regulations on labour and employment related issues, there are however many challenges to this on-going process. For instance, old laws are never really revoked; rather, new laws prevail. This creates an issue of multiple laws and regulations contradicting each other, and regulating the same subject. Another challenge is the slow implementation of these new laws. For example, we understand that the Employment and Skills Development Rules implementing the ESDL had to be passed in 2013. However, up until this date, it has not happened. As a consequence, practice on labour and employment matters in Myanmar is based more on labour authorities’ interpretations rather than on precise laws and regulations.

As a result of the above, when foreign investors in Myanmar deal with employment matters, they are faced with some challenging situations. In these situations, it is highly recommended that investors seek legal advice when making decisions to hire or terminate employees in Myanmar, as well as when drafting or revising employment contracts and employee manuals; and for a clarification on issues relating to working hours, on overtime payments and the minimum wage.

Considering that the legal framework in Myanmar is constantly evolving, it is extremely important to keep up to date with these changes; particularly in the areas of laws and regulations relating to labour and employment matters. Employment contracts, manuals and other employment related company regulations, and policies must always be checked for conformity with the latest laws and regulations. What is the standard practice today may not be the case next year!

This article is prepared by Mr. Viacheslav Baksheev (Slava), anindependent writer, for Siam City Law Offices Limited, Bangkok, Thailand.

(April 2017)

(Note : This article is not to be treated as a legal opinion but rather only as a guide on, Labour Law in Myanmar)